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Trafigura signs three-year cobalt deal with Shalina Resources subsidiary

Comments (0) Actualites, Africa, Mining

LONDON (Reuters) – Commodities trader Trafigura has signed an offtake agreement for cobalt hydroxide running to December 2020 with Shalina Resources and its subsidiary Chemaf, based in the Democratic Republic of Congo (DRC), Chemaf said in a statement on Wednesday.

Interest in cobalt reflects a shift in the automotive industry to electric cars (EV), powered by lithium-ion batteries which also require components made from the metal as well as other materials such as nickel.

Trafigura has already increased its foothold in nickel with an exclusive offtake agreement with Finland’s Terrafame, that also produces zinc and cobalt.

“If as expected EVs account for an increasingly significant proportion of a growing global vehicle fleet from 2025, it will drive sharp rises in demand for nickel and cobalt,” Trafigura Chief Executive Jeremy Weir said in the company’s 2017 annual report.

“That provides a very promising environment for our growing cobalt and nickel trading activity.”

Chemaf specialises in cobalt and copper exploration. It produced about 5,000 tonnes of cobalt last year from its Etoile mine and processing plant in Lubumbashi, with production set to rise to 7,000 tonnes this year.

More than 60 percent of global cobalt production comes from the DRC. Trading and mining group Glencore, the world’s biggest producer of cobalt, has already signed major offtake agreements with Chinese companies.

Trafigura traded 69.9 million tonnes of metals and minerals in 2017, up 18 percent from 2016.


(Reporting by Julia Payne; Editing by Susan Fenton and David Holmes)

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Glencore says South African coal strike violence worsens

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Glencore has laid arson charges against a South African mining union as a three-week coal strike turns increasingly violent, the mining company said on Thursday.

Workers from the Association of Mineworkers and Construction Union (AMCU) torched two trucks and offices at the Wonderfontein Mine on Wednesday night, taking the petrol bomb incidents to around 10 since the strike started, Glencore said.

Around 60 striking workers accused of intimidating other employees and damaging nearby farms have been arrested.

AMCU and the police were not available to comment.

Wonderfontein is a joint venture between Glencore and Shanduka Group, which was founded by Deputy President Cyril Ramaphosa. The mine produces 3.6 million tonnes annually.

Glencore said it was engaging with AMCU leadership over a wage dispute.


(Reporting by Zandi Shabalala; Editing by Joe Brock)

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Glencore to invest $1.1 bil in Zambia, kwacha gains

Comments (0) Africa, Business, Latest Updates from Reuters

LUSAKA (Reuters) – Glencore will invest over $1.1 billion in Zambia to sink three copper mine shafts with new technology that will extend mine life by over 25 years, pushing the kwacha to its highest in two months.

By 1040 GMT the currency of Africa’s number 2 copper producer had gained 1.3 percent to 11.1100 per dollar, its firmest level since Jan. 19.

“The news from Glencore obviously sent a positive signal but overall we are seeing a lot of dollar supply with very little demand,” analyst Maambo Hamaundu said.

Glencore plans to make the investments between now and 2018 and it was expected that Mopani Copper Mines (MCM) would be turned into a world-class mining operation by 2023, it said.

“We firmly believe that we shall be able to overcome the challenges that we face today as a company and become profitable and operationally efficient,” Mopani said in a statement.

Glencore was fully committed to Mopani and had invested over $3 billion in upgrading infrastructure and in major capital expansion programmes since 2000, Mopani said.

An electricity shortage in the southern African country and weaker copper prices have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth.


(Reporting by Chris Mfula; Editing by Susan Thomas)

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Eskom names short-term suppliers for Arnot coal-fired plant

Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Eskom will use coal from Glencore, South32 and five other suppliers to power the Arnot power station, including Exxaro Resources with whom it did not renew a 40-year contract in December, the utility’s spokesman said in a Twitter post on Tuesday.

The short-term supply agreements are separate from the list of bidders for the new long-term contract, the outcome of which Eskom said it will announce before the end of the first quarter of this year.

Eskom listed lesser-known Tegeta, Keaton Energy, Hlagisa Mining and Umsimbithi Mining as the other short-term suppliers to the 2,100 MW Arnot plant.


(Reporting by TJ Strydom; editing by Jason Neely)

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Moody’s downgrades Glencore’s ratings, keeps stable outlook

Comments (0) Africa, Business, Latest Updates from Reuters

(Reuters) – Commodities trader Glencore’s credit rating was downgraded to one notch above junk status by Moody’s Investors Service on Friday which cited likely weak mining market conditions over the next two years.

Moody’s downgraded Glencore’s ratings by one notch to Baa3 from Baa2 and said the outlook was stable.

“Our decision … reflects our expectations that the pricing environment in mining will remain unfavourable in 2016-17, making a return to the previous level of earnings unlikely,” Moody’s lead analyst on Glencore Elena Nadtotchi said in a statement.

“However, we believe that Glencore has the capacity to adjust its balance sheet to a reduced earnings level in order to maintain its investment grade ratings.”

Glencore said last week it remained focused on preserving its investment grade ratings.

Glencore has a higher debt load than its mining company rivals in part because its trading business borrows money to take large positions that can generate tight profit margins.

Moody’s said last month it was reviewing its rating of commodity trader Noble Group for a potential downgrade, citing the company’s weaker than expected liquidity profile and its high leverage. Noble’s current Moody’s rating is Baa3.

Switzerland-based Glencore came under pressure this year from investors and ratings agencies to cut its net debt of around $30 billion, one of the highest in the industry, as prices for commodities such as copper and coal hit multi-year lows.

In September, Glencore said it would take action to cut net debt, including asset sales, reduced expenditure, a suspension of dividend payments and raising $2.5 billion of new equity capital to protect its investment grade ratings after its shares fell to record lows.

It said last week it was targeting net debt of $18 billion to $19 billion by the end of 2016, lowering a previous target of $20 billion, after commodity prices tumbled further.

Glencore had previously said the plan would allow it to withstand copper prices of $4,000 a tonne, and the revised debt target was expected to help the company cope with copper below that level, even at $3,500 a tonne.

Copper hit a six-year low of $4,443.50 a tonne on Nov. 23, but has since recovered and was trading at $4,658 a tonne as of 1410 GMT on Friday.

“The stable outlook on the Baa3 ratings factors the expectation that Glencore will improve its leverage profile in 2016 and will continue to maintain strong liquidity,” Moody’s said.

The ratings agency also said an upgrade of Glencore’s ratings to Baa2 would be considered in the medium term once leverage was sustainably reduced.

Glencore makes about a quarter of its earnings from commodities trading, which had previously allowed it to withstand a steep fall in oil and metal prices slightly better than pure-play miners.

But the division came under the spotlight after it generated lower-than-expected earnings in the first half and the company cut its earnings forecast for the business.

Glencore has set guidance of $2.4 billion to $2.7 billion for the division’s earnings in 2016 and Moody’s said earnings below this target could place negative pressure on the Baa3 ratings.


(Reporting by Olivia Kumwenda-Mtambo; editing by Jason Neely and Jane Merriman)

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Glencore sees Tripoli-based NOC as sole legal seller of Libyan oil

Comments (0) Business, Latest Updates from Reuters, Middle East

LONDON (Reuters) – Commodities trader Glencore said on Thursday it recognises Libya’s Tripoli-based National Oil Corp. (NOC) as the sole legal marketer of the country’s oil, after securing an export deal earlier this year with the state-run company.

The NOC has said it operates independently of either the rival government that controls the capital city or the internationally recognised government based in the east of the country, which earlier this year set up a separate NOC.

“International oil companies and the international community fully support NOC’s position,” said Alex Beard, head of oil at Glencore.

“They have made it very clear there is no alternative to the NOC at its legal address in Tripoli as the only recognised marketer of Libyan oil,” he said in a statement.

Bloomberg reported last week the government in the east would prevent any tanker operated by Glencore from loading oil at Libyan ports if it did business with the Tripoli-based NOC.

Under the arrangement with the existing NOC, which began in September, Glencore loads and finds buyers for all the Sarir and Messla crude oil exported from the Marsa el-Hariga port near the country’s eastern border with Egypt.

While Libyan oil exports peaked at 1.6 million barrels per day, battles between rival factions seeking to control the country, as well as strikes and blockades by local tribes, have kept production under 0.5 million bpd for most of the past year.

Mustafa Sanalla, the chairman of the Tripoli-based NOC, on Thursday reiterated comments told to Reuters in an interview earlier this month, that Libya’s oil partners and the international community fully backed the company, despite attempts by the recognised government in the east to set up a parallel oil payments system.

“The NOC, at its legal address in Tripoli, remains the only legally empowered oil contracting authority of the Libyan state,” Sanalla said.

“It remains the seat of contracts for all the production, transportation and sale of Libyan oil. The board of NOC is committed to protecting the integrity and viability of the NOC.”


(Reporting by Dmitry Zhdannikov, writing by Amanda Cooper; Editing by David Evans)

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Glencore’s Zambia copper mining unit lays off 4,300 workers: company and union sources

Comments (0) Africa, Business, Latest Updates from Reuters

LUSAKA (Reuters) – Glencore’s Zambian unit has laid off 4,300 workers, union and company sources said on Tuesday, as the mining and trading company deepens cuts in copper output to support flagging prices.

“The company started giving out the letters of redundancy yesterday and has continued with the exercise today,” one union official said, referring to Glencore unit Mopani Copper Mines.

The union source said around 5,000 employees working for contractors would also lose their jobs as Mopani would only maintain two contractors specialized in the sinking of shafts.

Mopani had said in a letter dated October 21 giving notice of redundancy to mine unions that the firm was still losing millions of dollars and had to take action to secure its long term viability.

Mining companies are under Zambian law required to labour unions at least one month’s notice before laying off employees.

Zambia’s President Edgar Lungu said earlier this month he would not allow Glencore’s unit to lay off workers.

Mopani was expected to pay the 4,300 workers a total of $33 million, two company sources with knowledge of the retrenchment plan told Reuters.

Swiss-based Glencore has pledged to cut its net debt to $20 billion by the end of 2016 to regain the trust of investors after its shares tumbled to record lows this year.


(Reporting by Chris Mfula; Editing by James Macharia)

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Glencore’s Zambia unit to keep most workers despite suspension

Comments (0) Africa, Business, Latest Updates from Reuters, UK

LUSAKA (Reuters) – Glencore’s Zambian subsidiary Mopani Copper Mines will retain most of its workers even after copper production is suspended following a drop on the metal’s price, a source close to the company said on Friday.

An electricity shortage in the southern African nation and weaker copper prices have put pressure on the mining industry, threatening output, jobs and economic growth in Africa’s second-biggest copper producer.

The source said Mopani was in talks with the government and unions over Glencore’s plan to suspend operations and invest to improve efficiency at the mine.

The president of Zambia’s largest mining union said the move by the government could help save thousands of jobs.

“Over the next 18 months, Mopani will invest $500 million in expansion projects. A large number of employees are expected to be kept for mine development and care and maintenance,” the source told Reuters.

“We want Mopani to be efficient and competitive in the global copper market. It will also extend the mine life.”

Mining and trading company Glencore said on Monday it would suspended dividends, sell assets and suspend some copper production at Mopani and its Katanga Mining division in Democratic Republic of Congo for 18 months.

Mopani is the second largest employer in Zambia after the government with about 21,000 direct and contract workers.

Mopani would offer workers at the mining firm voluntary separation packages in line with Zambian law after the talks with the government ended, the source said.

A second source said the company was talking to the government and unions, but job cuts had not be discussed.

“As far as we are concerned everything is normal. We are undertaking a study to optimise our production efficiency with the unions and the government. Until we conclude that study we can’t make any pronouncements,” the source at Mopani said.

Glencore, Vedanta Resources, China’s NFC Africa and CNMC Luanshya Copper Mine have all said they will shut down some operations in Zambia because of the harsh business environment.

Electricity shortages and the slide in copper have driven the kwacha currency to record lows amid a sell-off in commodity-linked currencies as China’s economy slows.

By Chris Mfula (Reuters)

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Glencore holds talks with Congo officials on Katanga mine

Comments (0) Africa, Business, Canada, Latest Updates from Reuters

KINSHASA (Reuters) – Glencore held talks with Congolese officials in Kinshasa on Thursday over the company’s plans to suspend some copper output at its Katanga Mining unit for 18 months, an adviser to the prime minister said.

The adviser, who asked not to be identified, said there could be an announcement by the mining ministry on Friday regarding the talks. A Glencore spokesman declined to confirm Thursday’s meeting.

The London-listed company said on Monday it planned to suspend 400,000 tonnes of copper output at Katanga and at Mopani Copper Mines in Zambia over the next 18 months.

“This is not a mine that is going to close. It’s just a moment when the copper price is very, very low,” said the adviser, referring to Katanga Mining. “When they sell copper they lose money.”

He said Glencore’s Mutanda Mining operation in Congo was a more efficient operation and did not face the same problems.

A Glencore source said the company would invest about $900 million in Katanga Mining to modernize it. This would bring the production cost per pound down from $2.50 to about $1.65 by time mine reopens in 2017.

By comparison, Mutanda Mining’s cost of production is around $1.33 per pound of copper because it is a newer mine, the source said.

The source declined to comment on potential job losses, saying discussions about employment continued.

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